Tess Koleczek

This past February the US Treasury's Financial Crimes Enforcement Network (FinCEN) issued a proposal of new rulemaking that could significantly reshape Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations for Registered Investment Advisers (RIAs) and similar entities. Key points include: 1️⃣ RIAs will be defined as 'Financial Institutions'. 2️⃣ No customer due diligence requirements. 3️⃣ Added expense for RIAs, but who pays? This article explores potential impacts on advisors and institutions, providing guidance for adapting to these changes and preparing in advance. 👉 https://okt.to/Oh5Aqk #fintech #AML #compliance #financialservices

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We’ll return to our series of postings about AML system implementations, but we’d like to revisit our postings about recent #AML consent orders, and consider a letter recently written to federal regulators from the American Fintech Association (AFA). (link to the letter is included in comments). After reading the letter, you’ll see that the #AFA is suggesting that federal regulators are actually targeting banks that partner with Fintechs and offer #BaaS (Banking as a Service) services. If we look at recent AML consent orders, we’ll see quite a few for BaaS banks, but we’ll also see AML consent orders for non-BaaS banks, and most of these are smaller community banks. What’s concerning when reading the AML consent orders for non-BaaS banks is that they seem to be seriously missing the mark when it comes to #BSA compliance, with some of the pillars of BSA totally deficient, with at least one bank appearing to be deficient in all the pillars (they were required to perform a high risk lookback and a suspicious activity lookback review as well.) With this particular institution, it also appears that there was a exam letter that perhaps wasn’t heeded. It’s possible this prior exam letter included violations of law that were not addressed. So in one consent order we can see elements of what regulators have been speaking about in their various speeches and remarks. Financial institutions, especially the smaller ones, are still required to comply with BSA/AML/CFT requirements even when they are low risk. The belief that low risk equals no risk doesn’t hold up with BSA. We’ll continue to review consent orders and provide advice on how to avoid the findings listed in them. We are also available to perform a mock exam for your institution to give you insight as to what an examiner might find.

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Financial Crimes Enforcement Network, US Treasury released a 15-page advisory regarding #fentanyl. I'll say it again - if your #AML system does not allow you to operationalize these advisories, you need to get a new one. If your AML system says - don't worry, we have this covered... they don't. They can't. YOU as the AML Officer are the one that needs to be tailoring these advisories for your customer base. I encourage you to read the pdf below as there are several interesting red flags... but of course, below are the key takeaways: 1) Payment processors and e-commerce sites - you'll find that I have repetitive comments embedded throughout the document. They are unregulated (AML)... so, if you are a merchant acquiring #bank or a sponsor bank. You must ensure that your payment processors (both inbound and outbound rails for e-commerce sites) get this advisory and do something with it. Ask them to verify the industries of their #merchants. What are they doing for to monitor for this? (they will say nothing because there's no chargebacks) This is my hill. And I will not stop. Do we think that these criminals don't know about these loopholes?? 😑 2) All the red flags (14 of them) will live and die on good #data. Do you really know your business customers? Are your NAICS complete? Accurate? Appropriately assigned a risk rating? There are many NAICS related to chemicals and machine equipment. Ensure your high-risk customer criteria appropriately assigns risk scores to these. 3) If your bank thinks you don't have "risk" in this area, but you haven't done the work and developed a #threat landscape (customer and transactional), then you should start now. 4) This advisory is not just for tradFIs... but "brokers or dealers in #securities, mutual funds, and futures commission merchants and introducing brokers in commodities (FCM/IBs)". 5) If your FI does not business with any chemical or manufacturing equipment companies (I'm talking to you, #communitybanks)... ask them to certify they are not dealing with the precursor chemicals listed - see footnote 8, pg. 2. 6) Seeing payments to from MX and China? Dig deeper. Look for indicators of shell and front companies. 7) Negative news and keyword searches for related businesses will be vital in this hunt as well. Make them laser focused to your threats. There were many updates to the #OFAC list as well today. And so proud of the work that IRS Criminal Investigation and Lauren Kohr are doing to bring together the power of the PPP. Their initiatives along with FIs that will operationalize these advisories will go a long way in stopping the damage that fentanyl is doing to our communities. #ifollowdirtymoney #sanctions

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❗ Only a little over a week left to register for this FREE event for ACFCS Members ❗ I will be discussing Crypto vs. TradFi: Who knows their customers better? – What crypto firms can teach TradFi about KYC/CDD along side Joanna Marathakis and Brian Svoboda-Kindle. Register now to hear us talking about: ✔ The unique challenges and opportunities associated with KYC/CDD in the cryptocurrency sector ✔ The approaches taken by cryptocurrency firms to enhance customer identification and due diligence ✔ Regulatory trends and requirements shaping KYC/CDD practices in both crypto and TradFi, and their implications for businesses and customers. ✔ Strategies for fostering collaboration and knowledge sharing between crypto and TradFi firms to strengthen KYC/CDD practices and enhance financial integrity. 🔥 Definitely don't miss this one day event on June 12th! 🔥 https://lnkd.in/epVSn_Vu

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This past February the US Treasury's Financial Crimes Enforcement Network (FinCEN) issued a proposal of new rulemaking that could significantly reshape Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations for Registered Investment Advisers (RIAs) and similar entities. Key points include: 1️⃣ RIAs will be defined as 'Financial Institutions'. 2️⃣ No customer due diligence requirements. 3️⃣ Added expense for RIAs, but who pays? This article explores potential impacts on advisors and institutions, providing guidance for adapting to these changes and preparing in advance. 👉 https://okt.to/nVKjTu #fintech #AML #compliance #financialservices

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Our mid-year report, "Ten Key Regulatory Challenges of 2024," is now available. We are in a year of Regulatory Challenge marked by significant financial fines- including the largest single settlement ever a staggering $4.3B across DOJ, CFTC, FinCEN and OFAC for AML/sanctions compliance. KPMG Regulatory Insights offers a roadmap to navigate these challenges. https://bit.ly/4bXFLfc #RegulatoryInsights #RiskManagement

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This past February the US Treasury's Financial Crimes Enforcement Network (FinCEN) issued a proposal of new rulemaking that could significantly reshape Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations for Registered Investment Advisers (RIAs) and similar entities. Key points include: 1️⃣ RIAs will be defined as 'Financial Institutions'. 2️⃣ No customer due diligence requirements. 3️⃣ Added expense for RIAs, but who pays? This article explores potential impacts on advisors and institutions, providing guidance for adapting to these changes and preparing in advance. 👉 https://okt.to/lNU8v5 #fintech #AML #compliance #financialservices

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My firm's survey shows that most boards of financial institutions have not had the board oversight training on AML risk systems and practices. As a matter of fact, this training is a regulatory requirement and it exposes the bank (and other reporting entities) to compliance risk or regulatory sanctions. Understandably, getting the board together for any training is a daunting task. You can have the board members have the training in their own time on a plane or anywhere wheresoever. see: https://lnkd.in/dcUjHdKZ

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CFPB launches process to recognize open banking standards The Consumer Financial Protection Bureau (CFPB) has issued a rule outlining the qualifications for industry standard setting bodies to comply with the Personal Financial Data Rights Rule, including a step-by-step guide for application and evaluation. The CFPB is promoting open banking in the US by implementing new personal financial data rights. These rights, passed in 2010, will benefit smaller financial institutions and startups. The CFPB had proposed a rule in October 2023 to implement these rights, which will be finalized in the coming months. Read more at 👇 https://okt.to/mWCK9g #Banking #OpenBanking #technology #digitalization #Digital #Fintech

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Financial fraud has been growing - in volume, velocity and variety! With new technologies, frauds are getting more sophisticated, complex and tougher to detect. Here is a list of expanding #fraud typologies we need to build defenses against. What are some of the other frauds? #fraudprevention #financialcrime #RiskManagement #grc #advancedtechnology #operationalresilience #economiccrime

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Join Joe McNamara, FIS, Elena Christopher, and John Byrne for a deep dive into our recent market impact report, "Driving the Evolution of Financial Crime Compliance: The People and Tech Imperative". 🚀 Tune in for an engaging discussion on fostering effective collaborations between compliance professionals and law enforcement to tackle financial crimes more efficiently in today's dynamic environment. 🤝 : https://hubs.ly/Q02xNnFD0 Download the full report and stay informed on the latest trends shaping the future of financial crime compliance: https://hubs.ly/Q02xNvSm0 #AMLRightSource #FinancialCrimeCompliance #AML #TechRevolution #Collaboration #StayInformed | HFS Research |

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Thanks, Sarah Beth, as always for the insightful commentary. Data integrity is at the core of what we do…many FinCrime professionals still struggle (or in some cases, refuse) to acknowledge this but it’s an immutable fact: good inputs = good outputs (i.e., alerts), bad inputs = exam and audit findings/COs and expensive remediation (possibly a core upgrade, data lake initiative, or at the very least a targeted model validation that highlights proper mapping to BSA and sanctions systems). We have to work with the First Line of Defense and Business/Data Analytics teams to get the data right (KYC all the way) before we can use it to produce valuable alerts and cases. Its a partnership that pays dividends, both immediate and over time. Not always an easy path to forge but absolutely necessary. It also cannot be reemphasized enough: Everything we do as FC SMEs has impact: From protecting our clients from fraud and scams, to protecting our financial institutions from penalties, to safeguarding our financial infrastructure from being exploited by criminals, all the way to providing law enforcement and intelligence agencies with the information they need to do their jobs and put away the bad guys. What we do matters, every step of the way. So let’s do our best to get it right.

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"Excited to share that I will be joining a panel of esteemed experts to discuss an incredibly important topic: dealing with consent orders. Join us for an insightful conversation as we delve into the complexities of consent orders. Don't miss out on this opportunity to gain valuable knowledge and insights. Save the date and mark your calendars! #PanelDiscussion #ConsentOrders #IndustryInsights"

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Recent examiner focus and formal regulatory actions have made it essential for financial institutions to align their practices with the FFIEC Authentication Guidance update from 2021. Focusing on these areas serves as a blueprint for FIs striving to meet regulatory expectations and secure their operations: - Identity access management; - Monitoring and logging; - Independent verification; - Inventory management; and - Specific software access reporting. Read our blog to learn more: https://lnkd.in/djf-HUu3

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Traditional KYC methods, while once effective, struggle against today's sophisticated cyber threats. Learn how Trusted Identity Assurance (TIA) by ValidSoft addresses these shortcomings with a secure, privacy-focused approach. Discover why TIA is essential in an era where attackers easily bypass outdated authentication methods. https://lnkd.in/erj9Nj3D

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